(Recasts lead, adds CEO comments)
By Stephen Jewkes
MILAN, July 27 (Reuters) - Italy's top utility Enel is interested in small bolt-on acquisitions to fuel growth but sticks to its view that big transformational deals create no value.
"We won't be indulging in any large-scale M&A. I'm even more convinced it's extremely risky and makes little sense," CEO Francesco Starace said in a conference call on Thursday.
Bankers and analysts have said European utilities are ready for a new wave of mergers.
Sources told Reuters recently that Spain's Gas Natural had contacted Portuguese rival Energias de Portugal (EDP) about a 35 billion euro tie-up to create Europe's fourth biggest utility.
The creation of a new Iberian power champion could threaten the dominance of Enel and France's EDF on Europe's power market and could unleash a wave of mergers and acquisitions in the region.
"I see no value in big deals," Starace said.
Enel, Europe's biggest utility in terms of market value, paid around 39 billion euros to take control of Spanish utility Endesa eight years ago.
The state-controlled utility, which carries some 38 billion euros of debt, runs an asset rotation programme - selling some assets to buy others that may offer potentially higher returns.
In November it said it would reinvest about 2 billion euros of proceeds from asset sales in bolt-on acquisitions.
"We are in advanced talks to sell 3 assets in the second half of the year which should raise around 600-700 million euros," Starace said.
Enel is looking to its grids and green power businesses to drive growth, especially in emerging markets.
On Thursday the utility stuck to its full-year targets after core earnings in the first half fell, partly on drought conditions that affected power production in Spain and Italy.
The company said if its hydroelectric production had been normal its core earnings would have been 250 million euros more.
"The outlook is very encouraging," Starace said when asked about guidance for the next two years.
Enel is targeting ordinary core earnings of 16.2 billion euros in 2018 and 17.2 billion euros in 2019. (Reporting by Stephen Jewkes; Editing by Elaine Hardcastle)